With the Australian Taxation Office revealing it will speak to more than 350,000 taxpayers this year in a bid to crack down on dubious tax returns, it is now more important than ever to understand exactly what can and cannot be claimed.
Mortgage Choice Blaxland and Penrith franchisee owner Rob Lees said it’s imperative that taxpayers plan ahead to ensure they maximize their refund and also know how to claim correctly.
“Those who start thinking about their tax return before the end of the financial year often end up getting the most money back,” Mr Lees said. “With many people now heading online to complete their tax return, it’s essential that they educate themselves on what they can and cannot claim so they don’t short-change themselves.”
Mortgage Choice Blaxland and Penrith have created five steps to help boost your tax return:
Step 1: Lodge early
The thought of sorting through your piles of paperwork and receipts may make you break out in a sweat but the sooner you start the process the better. Complete your tax return early and let your refund boost your bottom line. For example you can use your tax return to pay off your credit card (thus saving you from paying high interest charges) or put it into a high interest savings account.
Step 2: Get private health insurance
If you’re single with a taxable income of $90,000 or more and no private health cover, you will need to pay a Medicare Levy Surcharge (MLS) – which can be quite costly. Taking out private health insurance now will help you to decrease the surcharge you have to pay and you’ll avoid paying any surcharge in the next financial year.
Step 3: Boost your superannuation
Salary sacrificed super contributions are taxed at 15%, which is likely to be lower than your marginal tax rate. And, because any super contributions come out of your before-tax income, they are not counted as assessable income for taxation purposes. This is a simple way to save on tax and build your wealth, as more of your income is put towards growing your superannuation.
Step 4: Claim against your investment property
Many property investors don’t realise they can claim for a range of expenses on their property, including but not limited to: agents’ fees, body corporate fees, advertising for tenants, building maintenance and repairs, cleaning costs, insurances, home loan fees, interest payments, council and water rates, the cost of traveling to and from the property for inspections, and depreciation deductions for the property. Making sure every possible claimable expense is claimed at tax time can help you to grow your overall refund. Of course, given that there are so many different claimable expenses available to property investors, it is worth speaking with a professional to make sure nothing is missed.
Step 5: Take out income protection
Income protection insurance is a claimable tax deduction. So if you already have a policy and can afford to pay your premiums for the next 12 months in advance, doing so before July will mean you are able to claim the cost as a tax deduction for the 2014/2015 financial year. It is important to note however, that income protection insurance is not deductable if funded through your superannuation.
If you would like learn more about your home loan or financial advice options, please contact the team at Mortgage Choice Blaxland and Penrith on 02 4739 9749.